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Tariffs at Depression-Era Highs to Keep 10-Year Treasury Yields Elevated

Tariffs at Depression-Era Highs to Keep 10-Year Treasury Yields Elevated

U.S. Treasury yields are set to diverge, with longer-term rates rising while shorter-term rates fall, according to a Reuters survey of nearly 50 bond strategists.

The 10-year Treasury yield, currently at 4.27%, is expected to climb to 4.30% and remain there through next year, driven by concerns over persistent inflation from tariffs—now at their highest levels since the Great Depression—and a surge in government debt issuance.

Meanwhile, the 2-year yield is projected to drop from current levels to 3.50% within a year as markets price in Federal Reserve rate cuts following weak employment data.

This divergence will steepen the yield curve, widening the gap between 2-year and 10-year yields from about 50 basis points to 80 basis points over the next year, reflecting the market’s complex outlook on growth, inflation, and monetary policy.

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